We watch the news or read the paper and all are wondering about the overall economy and housing market. It’s not easy to forget that these are real people having tremendous difficulties, because often they are our friends, neighbors or even us. It’s really sad and I hear the stories all the time about a job loss, furlough days, increased cost of living (insurance, gas etc), major health issues and other hardships. People are asking the question, what should I do? First understand that it’s not just you.
Many people are having trouble making ends meet. Don’t allow yourself to be swallowed up in self-pity. Do something about it to get your current situation behind you. If you have internet access there are many sites that will have tips on how to get help. It can be overwhelming. Here are some simple, straight-forward steps to take that I found through the official magazine of the National Association of Realtors.
If you think you might need to sell your home, and you expect the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won’t cover your total mortgage obligation and closing costs, and you don’t have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process.
You might want to first consider a loan modification. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as: Refinancing your loan at a lower interest rate; providing a different payment plan to help you get caught up; or providing a forbearance period if your situation is temporary. When a loan modification still isn’t enough to relieve your financial problems, a short sale could be your best option if: Your property is worth less than the total mortgage you owe on it. You have a financial hardship, such as a job loss or major medical bills. You have contacted your lender and they are willing to entertain a short sale.
The next step to a short sale is to hire a qualified real estate professional and a real estate attorney who specialize in short sales. Short sales have become common only in the last few years, so it may be hard to find professionals who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won’t try to take advantage of your situation or pressure you to do something that isn’t in your best interest. A qualified real estate professional can: Provide you with a comparative market analysis (CMA). Help you set an appropriate listing price for your home, market the home, and get it sold. Put special language in the MLS that indicates your home is a short sale and that lender approval is needed. Ease the process of working with your lender or lenders. Negotiate the contract with the buyers. Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.
Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale “package” that accompanies any offer typically must include: A hardship letter detailing your financial situation and why you need the short sale, copy of the purchase contract and listing agreement, proof of your income and assets and copies of your federal income tax returns for the past two years. Prepare buyers for a lengthy waiting period. Even if you’re well organized and have all the documents in place, be prepared for a long process. Waiting for your lender’s review of the short-sale package will usually take months. Longer time frames are the norm and the California Association of Realtors and National Association of Realtors are doing all they can to encourage a uniform and stream lined process.
Your real estate attorney and Realtor, with your authorization, can work with your lender’s loss mitigation department on your behalf to prepare the proper documentation and speed the process along. Don’t expect a short sale to solve all your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. This is not a process to go through alone and may not solve all your problems. It can however help you to regain your financial stability so you can see the light at the end of the tunnel. There is hope.
Questions or comments can be made to Kerry Suess at firstname.lastname@example.org.